Japanese Economy Regains Growth in Third Quarter

The Japanese economy grew 1.5 percent in the July-September quarter from the preceding quarter, or at an annualized pace of 6 percent, the first growth in four quarters, the Japanese government said.

The Japan’s gross domestic product contracted 0.3 percent in the April-June quarter from the preceding quarter, or at an annualized pace of 1.3 percent. A recession is widely defined as a decline in real GDP for two quarters in a row.

The Japanese cabinet office attributed the strong July-September growth to a recovery in exports, especially of autos, and consumer spending, which had both been hit hard by the devastating March 11 earthquake and tsunami in the northeastern part of the country. Japan’s exports of goods and services grew 6.2 percent in the July-September quarter after sinking 5 percent in the April-June period on a quarter-on-quarter basis.

Consumer spending, which accounts for nearly 60 percent of Japan’s GDP, rose 1 percent in the July-September quarter on a quarter-on-quarter basis. In nominal terms, or before adjustment for price change, the Japanese economy grew 1.4 percent in the July-September period on a quarter-on-quarter basis, or at an annualized pace of 5.6 percent.

Many analysts now expect the Japanese economy to continue to grow in the October-December quarter, but at a much slower pace.

Economic and Fiscal Policy Minister Motohisa Furukawa also sounded a cautious tone on the future direction of the Japanese economy. At a press conference on Monday, he stressed the need to “watch closely downside risks, such as the weakening recovery in overseas economies, the steep appreciation of the yen and flooding in Thailand.”

A stronger yen affects Japanese exports as it makes Japanese products more expensive in overseas

Contact Hisane Masaki at yiu45535@nifty.com.